Now is an opportune time for insurance companies to enter the private pension market, as pressure builds on regional economies and governments feel the need to reduce the scale of public-sector pension benefits, according to Mr Luc Metivier, CEO of Takaud Savings and Pensions, a specialist savings and pensions provider based in Bahrain.
He said: “In the MENA region, populations are growing steadily and the number of retired persons is also increasing year after year. The time to address the pension need is now, before economic and social pressures exceed the region’s capability to respond.”
He highlighted simplicity and quality as essential elements of pension solutions that insurance companies can distribute to MENA companies seeking cost-effective ways to enhance the employment-benefit proposition, and to the millions of employees who want to plan for a better retirement.
Across the world, countries are supplementing government pension schemes, which are considered Tier 1 systems, with private pension schemes, representing Tier 2, and personal savings by individuals, which are Tier 3 pension systems.
Mr Metivier, who was speaking at the annual conference of the Association of Insurers and Reinsurers of Developing Countries in Bahrain, pointed out that developing countries, in particular, need Tiers 2 and 3 to be developed, to supplement government schemes.
He said: “There is great variability in how employer-employee systems can be designed, with low charges because of the high volumes, limits on employer contributions that can include vesting rules, and simplified investment solutions and administration.” He stressed that employers need simple solutions that employees can readily understand.